BS reported that the deal between Bhushan Steel Limited and Sumitomo Metal Industries to jointly develop 6 million tonne steel unit in West Bengal has run into rough weather, with no agreement in sight on valuations even a year after both began negotiations.

Mr Nittin Johari director finance of BSL told Business Standard that “The talks are stuck, as there are differences over the valuation for the project. We need to resolve the issue.”

When asked specifically about the money Bhushan Steel has been asking Sumitomo to pay, Mr Johari said that “I can't disclose that but there are certain issues which we are trying to resolve. The talks have been extended because of that.”

As the matter stands, the technical agreement between the two companies is signed and sealed. Sumitomo will be supplying technical know how to BSL and market the steel produced from Bhushan’s steel plant in Orissa.

Bhushan had intended that Sumitomo might also take a 40% stake in the West Bengal plant, which would mean injection of crucial money for the project. Mr Johari said that “It’s good for us if the deal goes through but we have no issues if it doesn't. We will look at other avenues to raise the money.”

Initially, Bhushan had planned to set up 3 million tonne steel plant in West Bengal but doubled the planned capacity once Sumitomo expressed its intention to invest. The intended total investment is the plant is still not clear. The project is likely to come up in two phases of three million tonnes each.

In December last year, Bhushan Steel had said the two companies had agreed to jointly develop the West Bengal project, with Sumitomo providing the technical know how and also perhaps helping in marketing the product. The company had also said Sumitomo may take a 26% to 40% stake in the 6 million tonne plant.

(Sourced from BS)